Exhibit 10.1


 


THIRD AMENDED PURCHASE OPTION AGREEMENT


 


This
Third Amended Purchase Option Agreement dated effective June 30, 2008 is
between Rock Energy Resources, Inc. f/k/a Hanover Gold Company, Inc.(successor
in interest to Rock Energy Partners, LP), Santa Maria Pacific, LLC, Gitte-Ten,
LLC d/b/a Phoenix Energy, LLC, NW Casmalia Properties, LLC, and Orcutt
Properties, LLC.


 


R E C I T A L S:


 


WHEREAS, Rock Energy Partners, LP, Santa Maria Pacific, LLC,
Gitte-Ten, LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC, and Orcutt
Properties, LLC. entered into the Base Agreement, dated as of December 1,
2007 (which was subsequently amended by the Amendment to Base Agreement dated February 15,
2008 executed by Rock Energy Resources, Inc. f/k/a Hanover Gold Company, Inc.,
Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia Properties, LLC, Phoenix
Energy, LLC and Orcutt Properties, LLC and Second Amendment to Base Agreement
dated as of March 25, 2008 executed by Rock Energy Resources, Inc.
f/k/a Hanover Gold Company, Inc., Santa Maria Pacific, LLC, Gitte-Ten,
LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC and Orcutt Properties,
LLC) (“Base Agreement”);


 


WHEREAS, the Base Agreement provided for entry into the
Purchase Option Agreement between REP, Santa Maria Pacific, LLC, Gitte-Ten,
LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties,
LLC dated December 14, 2007;


 


WHEREAS, Rock Energy Partners, LP assigned to Hanover Gold
Company, Inc. (i) all rights under the Transaction Documents, (ii) the
Initial Orcutt Interests, and (iii) the Second Orcutt Interests.  By virtue of the assignments, Hanover Gold
Company, Inc. became the sole owner of said rights and interests;


 


WHEREAS, subsequent to the assignments referenced above,
Hanover Gold Company, Inc. changed its name to Rock Energy Resources, Inc.;


 


WHEREAS, the Purchase Option Agreement was subsequently
amended by the Amendment to Purchase Option Agreement dated February 15,
2008 executed by Rock Energy Resources, Inc. f/k/a Hanover Gold Company, Inc.,
Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia Properties, LLC, Phoenix
Energy, LLC and Orcutt Properties, LLC and Second Amendment to Purchase Option
Agreement dated as of March 25, 2008 between Rock Energy Resources, Inc.
f/k/a Hanover Gold Company, Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW
Casmalia Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties, LLC;


 


WHEREAS, as of March 31, 2008, Gitte-Ten, LLC and
Phoenix Energy, LLC merged with Gitte-Ten, LLC being the surviving company; and


 


WHEREAS, the Parties desire to further amend the Purchase
Option Agreement as set forth herein.


 

















 


NOW, THEREFORE, in good and valuable consideration, the
parties agree as follows:


 


ARTICLE I


 


DEFINITIONS


 


The
definitions of the terms contained in the Base Agreement are incorporated
herein.  All terms defined in the Base
Agreement will have the same meaning when employed in this Agreement.  The following additional terms as used in
this Agreement shall have the meanings indicated below unless the context
otherwise requires:


 


1.1           “Base
Agreement” shall mean the Base Agreement dated December 1, 2007
executed by RER and the SMP Parties, together with all exhibits and schedules
attached thereto and referenced therein, which was subsequently amended by the
Amendment to Base Agreement dated February 15, 2008 executed by Rock
Energy Resources, Inc. f/k/a Hanover Gold Company, Inc., Santa Maria
Pacific, LLC, Gitte-Ten, LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC
and Orcutt Properties, LLC and Second Amendment to Base Agreement dated as of March 25,
2008 executed by Rock Energy Resources, Inc. f/k/a Hanover Gold Company, Inc.,
Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia Properties, LLC, Phoenix
Energy, LLC and Orcutt Properties, LLC, and any and all properly executed
amendments thereto that expressly provide that they are to supplement, amend or
revise said Base Agreement.


 


1.2           “Business Day” shall mean a day other
than a Saturday, a Sunday, or any federal holiday.


 


1.3           “Closing”
shall mean the occurrence of the events necessary to consummate a sale to RER
pursuant to this Agreement.


 


1.4           “Closing
Date” shall mean the date specified as such in each notice of intent to
exercise an option described in Article III and Article IV of this
Agreement.


 


1.5           “Consent
Leases” shall mean the Leases described in Exhibit A.


 


1.6           “Default”
shall mean the occurrence of any conditions, events or acts which would
constitute an Event of Default or which with the giving of notice or lapse of
time or both would, unless cured or waived, become an Event of Default.


 


1.7           “Development/Earn
in Agreement” shall mean the agreement dated December 14, 2007 between
Rock Energy Partners, LP, Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia
Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties, LLC, which was
subsequently amended by the Amended Development Agreement dated February 15,
2008 between Rock Energy Resources, Inc. f/k/a Hanover Gold Company, Inc.,
Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia Properties, LLC, Phoenix
Energy, LLC and Orcutt Properties, LLC and the Second Amended Development
Agreement dated as of March 25, 2008 between Rock Energy Resources, Inc.
f/k/a Hanover Gold Company, Inc., Santa Maria Pacific, 


 


2

















 


LLC,
Gitte-Ten, LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC, and Orcutt
Properties, LLC.


 


1.8           “Event of
Default”  shall mean the occurrence of
any conditions, events or acts described in Section 8.1.


 


1.9           “NW
Casmalia Option A Interests” shall mean (i) a 5.0% BPO Working
Interest and a 4.5% APO Working Interest in the NW Casmalia Leases, and (ii) a
5.0% BPO Working Interest and a 4.5% APO Working Interest in the NW Casmalia
Property Rights.


 


1.10         “NW
Casmalia Option B Interests” shall mean (i) a 5.0% BPO Working
Interest and a 4.5% APO Working Interest in the NW Casmalia Leases, and (ii) a
5.0% BPO Working Interest and a 4.5% APO Working Interest in the NW Casmalia
Property Rights.


 


1.11         “Option A”
shall mean the option granted pursuant to Article III of this Agreement
which is subject to the terms and conditions of this Agreement.


 


1.12         “Option A Exercise
Period” shall mean the period from the Closing Date with respect to the
Development/Earn In Agreement Option II until the earlier of (i) 3:00 p.m.,
Pacific Standard Time, on October 31, 2008, or (ii) occurrence of an
Event of Default.


 


1.13         “Option A
Interests” shall mean the Orcutt GTL Option A Interests, Orcutt OPL Option
A Interests, Orcutt PEL Option A Interests and NW Casmalia Option A Interests.


 


1.14         “Option B”
shall mean the option granted pursuant to Article IV of this Agreement
which is subject to the terms and conditions of this Agreement.


 


1.15         “Option B Exercise
Period” shall mean from the Closing Date with respect to Option A until the
earlier of (i) 3:00 p.m., Pacific Standard Time, on January 5,
2009, or (ii) occurrence of an Event of Default.


 


1.16         “Option B
Interests” shall mean the Orcutt GTL Option B Interests, Orcutt OPL Option
B Interests, Orcutt PEL Option B Interests and NW Casmalia Option B Interests.


 


1.17         “Orcutt GTL Option
A Interests” shall mean (i) a 5.4455% BPO Working Interest and a 4.99009%
APO Working Interest in the Orcutt GTL Leases, other than the Shell Lease, and (ii) a
5.0% BPO Working Interest and a 4.5% APO Working Interest in the Orcutt GTL
Property Rights, all of which are subject to and burdened by the GTL Adjustment
ORRI.


 


1.18         “Orcutt GTL Option
B Interests” shall mean (i) a 5.4455% BPO Working Interest and a 4.99009%
APO Working Interest in the Orcutt GTL Leases, other than the Shell Lease, and (ii) a
5.0% BPO Working Interest and a 4.5% APO Working Interest in the Orcutt GTL
Property Rights, all of which are subject to and burdened by the GTL Adjustment
ORRI.


 


3

















 


1.19         “Orcutt
OPL Option A Interests” shall mean (i) a 5.0% BPO Working Interest and
a 4.5% APO Working Interest in the Orcutt OPL Leases, and (ii) a 5.0% BPO
Working Interest and a 4.5% APO Working Interest in the Orcutt OPL Property
Rights.


 


1.20         “Orcutt
OPL Option B Interests” shall mean (i) a 5.0% BPO Working Interest and
a 4.5% APO Working Interest in the Orcutt OPL Leases, and (ii) a 5.0% BPO
Working Interest and a 4.5% APO Working Interest in the Orcutt OPL Property
Rights.


 


1.21         “Orcutt
PEL Option A Interests” shall mean (i) a 5.0% BPO Working Interest and
a 4.5% APO Working Interest in the Orcutt PEL Leases, and (ii) a 5.0% BPO
Working Interest and a 4.5% APO Working Interest in the Orcutt PEL Property
Rights.


 


1.22         “Orcutt
PEL Option B Interests” shall mean (i) a 5.0% BPO Working Interest and
a 4.5% APO Working Interest in the Orcutt PEL Leases, and (ii) a 5.0% BPO
Working Interest and a 4.5% APO Working Interest in the Orcutt PEL Property
Rights.


 


1.23         “RER Reaffirmation
and Release” shall mean the instrument in the form of Exhibit B.


 


1.24         “SMP Parties
Reaffirmation and Release” shall mean the instrument in the form of Exhibit C.


 


ARTICLE II


 


Option Price


 


2.1           As the purchase price for
Option A and Option B, RER has previously delivered to SMP, as agent for itself
and the remaining SMP Parties, RER’s check in the amount of ONE HUNDRED AND
NO/100 Dollars (U.S. $100.00) (the “Independent Consideration”), which is in
addition to and independent of any other consideration provided hereunder.  The Independent Consideration is
non-refundable and shall be retained by Seller under all circumstances.


 


2.2           The SMP Parties acknowledge
their prior receipt of the Independent Consideration and acknowledge the
sufficiency of the Independent Consideration as the purchase price for Option A
and Option B to solely support this Agreement.


 


ARTICLE III


 


Option A


 


3.1           Grant of Option.  Subject to the strict adherence to the terms
and conditions contained in this Agreement, the SMP Parties hereby grant to RER
the option to acquire an assignment of the (i) Orcutt GTL Option A
Interests, (ii) Orcutt PEL Option A Interests, (iii) Orcutt OPL
Option A Interests and (iv) NW Casmalia Option A Interests (excluding the
Consent Leases if consent to assign is not obtained), prior to expiration of
the Option A Exercise Period.


 


4

















 


3.2           Notice of
Intent to Exercise.  RER must
deliver to the SMP Parties written notice by RER of its intent to exercise
Option A.  The notice must be signed by RER
and delivered to the SMP Parties no later than three (3) Business Days
prior to the earlier of (i) the Closing Date, and (ii) expiration of
the Option A Exercise Period.  The notice
must specify a Closing Date that is prior to expiration of the Option A
Exercise Period.  Delivery of such notice
is a pre-condition to exercise of Option A.


 


3.3           Closing.  A Closing will be scheduled for the Closing Date
specified in the notice of intent to exercise pursuant to Section 3.2.


 


3.4           Exercise of
Option.  To exercise the option granted
pursuant to this Article, RER must at the Closing deliver to the SMP Parties
the following:


 


a.             by transfer of
immediately available funds to an account designated by the SMP Parties, the
sum of Twelve Million Five Hundred Thousand and 00/100 Dollars ($12,500,000.00)
on or before the Closing Date; and


 


b.             a duly executed
RER Reaffirmation and Release.


 


Provided
that RER timely satisfies its requirements to exercise Option A the SMP Parties
shall at the Closing deliver to RER the following:


 


a.             an assignment
of the Orcutt GTL Option A Interests duly executed by GTL or its assignee;


 


b.             an assignment
of the Orcutt PEL Option A Interests duly executed by PEL or its assignee;


 


c.             an assignment
of the Orcutt OPL Option A Interests duly executed by OPL or its assignee;


 


d.             an assignment
of the NW Casmalia Option A Interests (excluding the Consent Leases if consent
to assign is not obtained prior to Closing) duly executed by NWCP or its
assignee; and


 


e.             a duly executed
SMP Parties Reaffirmation and Release dated as of the Closing Date.


 


3.5           Effect of
Failure to Timely Exercise Option A.  As provided in Article VIII, failure to
timely satisfy all of its requirements to exercise Option A shall constitute an
Event of Default.


 


3.6           Effective Date
of Assignment.  The Effective
Date of the assignments of the (i) Orcutt GTL Option A Interests, (ii) Orcutt
PEL Option A Interests, (iii) Orcutt OPL Option A Interests, and (iv) NW
Casmalia Option A Interests, shall be November 1, 2008.


 


5

















 


ARTICLE IV


 


Option B


 


4.1           Grant of Option.  Subject to the strict adherence to the terms
and conditions contained in this Agreement, the SMP Parties hereby grant to RER
the option to acquire an assignment of the (i) Orcutt GTL Option B
Interests, (ii) Orcutt PEL Option B Interests, (iii) Orcutt OPL
Option B Interests, and (iv) NW Casmalia Option B Interests (excluding the
Consent Leases if consent to assign is not obtained), prior to expiration of
the Option B Exercise Period.


 


4.2           Notice of Intent to Exercise.  RER must deliver to the SMP Parties written
notice by RER of its intent to exercise Option B.  The notice must be signed by RER and
delivered to the SMP Parties no later than three (3) Business Days prior
to the earlier of (i) the intended Closing Date, and (ii) expiration
of the Option B Exercise Period.  The
notice must specify a Closing Date that is prior to expiration of the Option B
Exercise Period.  Delivery of such notice
is a pre-condition to exercise of Option B.


 


4.3           Closing.  A Closing will be scheduled for the Closing Date
specified in the notice of intent to exercise pursuant to Section 4.2.


 


4.4           Exercise of
Option.  To exercise the option granted
pursuant to this Article, RER must at the Closing deliver to the SMP Parties
the following:


 


a.                                       by transfer of
immediately available funds to an account designated by the SMP Parties, the
sum of Thirteen Million and 00/100 Dollars ($13,000,000.00) on or before the
Closing Date; and


 


b.                                      the duly
executed RER Reaffirmation and Release.


 


Provided
that RER timely satisfies its requirements to exercise Option B, the SMP
Parties shall at the Closing deliver to RER the following:


 


a.                                       an assignment
of the Orcutt GTL Option B Interests duly executed by GTL or its assignee;


 


b.                                      an assignment
of the Orcutt PEL Option B Interests duly executed by PEL or its assignee;


 


c.                                       an assignment
of the Orcutt OPL Option B Interests duly executed by OPL or its assignee;


 


d.                                      an assignment
of the NW Casmalia Option B Interests (excluding the Consent Leases if consent
to assign is not obtained prior to Closing) duly executed by NWCP or its
assignee; and


 


e.                                       a duly executed
SMP Parties Reaffirmation and Release


 


6

















 


4.5           Effective Date of Assignment. The effective
date of the assignments of the (i) Orcutt GTL Option B Interests, (ii) Orcutt
PEL Option B Interests, (iii) Orcutt OPL Option B Interest, and (iv) NW
Casmalia Option B Interests, shall be January 1, 2009.


 


ARTICLE V


 


Access to Information and
Due Diligence


 


5.1           Record Review.  To allow RER (i) to confirm the SMP
Parties’ title, and (ii) to conduct additional due diligence with respect
to the Orcutt Property and the NW Casmalia Property (following the exercise of
Option A), the SMP Parties shall prior to expiration of the Option B Exercise
Period, give RER access during normal business hours to all contract land and
lease and operational records; to the extent such data and records are in the
SMP Parties’ possession and relate to the property.  The Confidentiality Agreement will continue
in force and effect.


 


5.2           Physical
Inspection.  The SMP
Parties (upon delivery by RER of its paid up insurance policy covering
liability for the matters listed below) will permit RER, at its sole risk and
expense, to conduct reasonable inspections of the Orcutt Property and the NW
Casmalia Property at times approved by the SMP Parties.  RER shall repair any damage to the properties
resulting from its inspection and shall indemnify, defend and hold the SMP
Parties harmless from and against any and all Claims arising from RER
inspecting and observing the properties, including, without limitation, (a) Claims
for personal injuries to or death of employees of RER, its contractors, agents,
consultants and representatives, and damage to the property of RER or others
acting on behalf of RER, regardless of whether such Claims arise out of or
result in whole or in part, from the condition of the properties or the SMP
Parties’ (or its employees’, agents’, contractors’, successors’ or assigns’)
sole or concurrent negligence, strict liability or fault, and (b) Claims
for personal injuries to or death of employees of the SMP Parties or third
parties, and damage to the property of the SMP Parties or third parties, to the
extent caused by the negligence, gross negligence or willful misconduct of RER.


 


5.3           Non-Extension.  The Option A Exercise Period and the Option B
Exercise Period will not be extended for any reason including RER’s inability
to conduct additional inspections and review so long as such inability is not
the result, directly or indirectly, of the failure by the SMP Parties to
perform their obligations under this Agreement.


 


7

















 


ARTICLE VI


 


Treatment of Option
Exercise Payments


 


Each
option exercise payment shall be the cash purchase price for the acquired
interest.  The option exercise payments
provided for in this Agreement shall be the property of the SMP Parties upon
receipt.  RER shall have no right to or
interest in any option exercise payment. 
The restriction on application of funds contained in the
Development/Earn in Agreement is not applicable to the option exercise payments
made hereunder.


 


ARTICLE VII


 


Incorporation of Base
Agreement

Representations, Disclaimers, Warranties and Indemnities


 


RER and the SMP Parties
ratify, confirm and adopt with respect to the Option A Interests and the Option
B Interests  all statements, terms,
provisions, covenants, representations, disclaimers, warranties and indemnities
made in the Base Agreement with the same force and effect as if set out in this
Agreement in full.


 


ARTICLE VIII


 


Defaults


 


8.1           Events of Default.  The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder.


 


8.1.1        The failure of RER to timely satisfy the
requirements to exercise any of the following options:  (i) Development/Earn In Agreement Option IV
within the period specified in the Development/Earn in Agreement as extended by
the Extension Option Agreement, (ii) Option A, or (iii) Option B;


 


8.1.2        The failure, refusal or neglect of RER to properly
observe, perform or comply with any covenant, agreement or obligation contained
in this Agreement, the Base Agreement or Operating Agreements and the
continuation of such failure, refusal or neglect for fifteen (15) days after
written notice thereof has been given to RER by an SMP Party.


 


8.1.3        Any representation, warranty or statement made by RER
in this Agreement or the Base Agreement shall prove to have been incorrect in
any material respect when made or deemed to have been made and is not cured by RER
within ten (10) days after written notice thereof has been given to RER by
an SMP Party.


 


8.1.4        The filing or commencement by RER of a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect, or 


 


8

















 


seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property, or RER
shall consent to any such relief or to the appointment of or taking possession
by any such official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debt as they become due, or shall take any
corporate action to authorize any of the foregoing.


 


9.1.5        The filing or commencement of an involuntary case or
other proceeding against RER seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of ninety (90) days; or an
order for relief shall be entered against RER under the federal bankruptcy laws
as now or hereafter in effect.


 


8.2           Termination
Consequences.  Upon the
occurrence of an Event of Default hereunder all options granted pursuant to
this Agreement as to which a Closing has not occurred shall terminate.


 


ARTICLE IX


 


Notices


 


Article XII of the Base
Agreement is incorporated herein and made applicable hereto.


 


ARTICLE X


 


Miscellaneous


 


10.1         Incorporation.  Article XIII of the Base Agreement is
incorporated herein and made applicable hereto.


 


10.2         Non-Exclusion.  The express incorporation of specific
provisions of the Base Agreement herein shall not limit the extent to which
this Agreement and the assignments made hereunder are controlled by the Base Agreement.


 


10.3         Lease Exclusion Payment.  In the event that consents to assignment of
interests in the Consent Leases are not obtained prior to a Closing, NWCP shall
within seven (7) days of the Closing with respect to each option pay to RER
the sum of Nine Hundred Sixty-Three and 33/100 Dollars ($963.33).


 


IN WITNESS WHEREOF, the authorized representatives
of the parties executing this Agreement on the dates stated below.


 


9

















 


	
   

  	
   

  	
  ROCK ENERGY RESOURCES,
  INC. F/K/A

  HANOVER GOLD COMPANY, INC. (successor

  in interest to Rock Energy Partners, LP)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SANTA
  MARIA PACIFIC, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GITTE-TEN, LLC D/B/A PHOENIX ENERGY,

  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NW CASMALIA PROPERTIES,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ORCUTT PROPERTIES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
								



 


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